Morning Minutes 3/5/2020

Morning Minutes

Oil In Focus With OPEC Meeting on Production; Nonfarm Payrolls Preview

March 5, 2020
8:45 am EST

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

The see-saw battle between bulls and bears for market dominance that has seen neither side able to push their agenda for more than 24 hours continues. Coming off an explosive 1,173-point, 4.5% gain for the Dow Industrials yesterday, Dow Futures are currently down 490 points or 1.9%. Market action has also been mixed overseas. Asia Pacific indices rallied overnight led by 2.0% gains for Hong Kong and Shanghai. European markets are lower this morning with London, Milan, Paris and Frankfurt all falling between 1.6% and 1.8%.

The main focus for investors today is on the oil market where WTI is up 0.45% and Brent is up 0.25% so far. Crude oil prices have collapsed over the last two months, having plunged 33.7% from a peak of $65.66 on January 8th, to a low of $43.48 on March 2nd on concerns that the coronavirus outbreak would reduce the demand for fossil fuels. OPEC is meeting today to discuss production levels and the OPEC+ group led by Russia is expected to join the discussion tomorrow. Press reports suggest that OPEC has agreed to a 1.5 mmbbl/d production cut to bring the market back into balance contingent on Russia and other non-OPEC producers joining in the cuts. Oil contracts could see significant swings over the remainder of this week depending on whether an agreement is reached (or not), and how deep the cuts to production are (if any).

Bank of Canada Governor Poloz is speaking today which investors may look to for comments on the current health and outlook for the Canadian economy. In particular, investors may try to get a sense of whether yesterday’s surprise 0.50% Canadian interest rate cut to 1.25% is considered a preventative measure of if the central bank is already seeing weakness. This morning, Canadian Natural Resources had mixed news reported adjusted EPS of $0.58, for the December quarter which was short of the $0.70 street estimate, but management raised the dividend by 13.3%.

Tomorrow brings Canadian employment numbers. The street is expecting an increase of 10K jobs, I think that following yesterday’s positive ADP payrolls report, the North American job market may be stronger than investors are expecting so we could see a 20K print for Canada. US nonfarm payrolls are due tomorrow as well. The street is expecting a drop to 175K from 225K last month, but I think the result may come in somewhere near the middle, say around 200K.

 

Market Update With SIA Wealth Founder and CEO Jeremy Fehr

In light of recent market volatility, Jeremy has recorded a 17-minute webinar video with his current thoughts on the SIA Charts Equity Action Calltm, recent action in equity and commodity markets, and his analysis of key charts. To access the video, please click on the link below:

https://register.gotowebinar.com/recording/2494196353438372610

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